China’s central bank raised the yuan’s daily fixing by the most in almost a week after a scaling back of Federal Reserve interest-rate expectations prompted a drop in the greenback.
The People’s Bank of China strengthened its reference rate by 0.32 percent to 6.4961 a dollar, ending a three-day weakening run. The move lagged a 1.1 percent overnight decline in a gauge of dollar strength. The offshore yuan extended losses, trading down 0.12 percent at 6.4934 as of 9:35 a.m. in Hong Kong. The onshore rate rose 0.38 percent, the most in almost two weeks.
“The fixing is not reflecting all the dollar weakness overnight,” said Tommy Ong, managing director for treasury and markets at DBS Hong Kong Ltd. “This shows that the PBOC doesn’t want the currency to strengthen too much.”
Fed officials cited the potential impact from weaker global growth and financial-market turmoil on the U.S. economy for keeping the target range for the benchmark federal funds rate at between 0.25 percent and 0.5 percent, according to a statement released by the U.S. central bank on Wednesday.
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